Sub-Saharan
Africa’s top 10 oil-producing countries have sold more than US$254 billion in crude through state-owned oil companies over the past
three years without publicly accounting for the money.
Governments
in sub-Saharan Africa are selling crude petroleum in shadowy deals worth
hundreds of billions of dollars, according to a new report.
The lack of
transparency over staggering amounts of oil revenues is causing concern in
countries that have weak budgetary oversight and long track records of
corruption, Natural Resource Governance Institute said.
Its
research found that sub-Saharan Africa’s top 10 oil-producing countries have
sold more than US$254 billion in crude through state-owned oil
companies over the past three years without publicly accounting for the money.
This is equivalent to 56 per cent of their combined government revenues, the
institute said in its ‘Big Spenders’ report released on Monday.
Among the
biggest purchasers were mega Swiss commodity traders, including Glencore,
Arcadia and Trafigura, which snapped up one-quarter of the sales between 2011
and 2013, the institute said. It called for new regulations for nationally
owned oil companies and big trading firms to disclose their deals.
The sales
to Swiss traders were worth an estimated US$55 billion — more than twice as much
money as these 10 countries — Angola, Cameroon, Chad, Côte d‘Ivoire, Republic
of Congo, Equatorial Guinea, Gabon, Ghana, Nigeria and South Sudan — received
in net foreign aid, it said.
“The
payments made by Swiss companies generate a significant portion of public
revenues in some of the world’s poorest countries, and are subject to
governance risks as they take place in environments of weak institutions and
widespread corruption,” it said.
Kenya is
bracing for the launch of commercial oil production within the next few years.
The Government has shown little interest in transparency with contracts signed
with oil prospecting firms remaining shrouded in secrecy. There are fears this
secrecy may continue into sales of oil and spending of resource wealth in
coming years.
The push
from Natural Resource Governance Institute is part of its efforts to expand the
transparency rules for oil, gas and mining as it presses governments to account
for how they spend their resource wealth. Currently, more than one billion
people live in dire poverty in resource-rich countries.
So far
global regulations for resource extraction payments have focused on publicly
traded companies. They do not cover all aspects of agreements with a
government, including oil provided to a national company for future sale.Switzerland
is considering new regulations on extractives disclosure for natural resource
companies, but the regulations are modeled after similar rules in the European
Union and the United States and would not cover commodity trading firms and
their deals with national oil companies.
“Switzerland
should accept its responsibility as the world’s leading commodity trading hub
and pass regulation that requires Swiss companies producing or trading in
natural resources to disclose all payments made to government and state-owned
companies, including payments associated with trading activities,” the report
said.
The
difficulty in compiling the data, which came from media reports, government and
company publications and market intelligence, exemplifies the need for
transparency, it said.
Among the
report’s findings:
1. Sales by national oil companies
account for more than half of government revenues in the Republic of Congo,
Angola, Nigeria and Equatorial Guinea.
2. Glencore, a top global commodity
trader, buys all of Chad’s oil, and its payments in 2013 were equal to 16 per
cent of the government’s revenue, yet the terms of the oil sales are not
publicly disclosed. It struck the deal for exclusive rights without a
competitive tender after investing US$300 million in two oilfields there.
3. In Nigeria, Swiss companies bought
$37 billion over three years, equal to 18 per cent of government revenues and
more than one-third of its oil. A former central bank governor for Nigeria has
alleged that US$20 billion has gone missing in Nigerian oil revenues.
4. Nigeria awards term contracts to a
list of companies that are eligible to buy oil throughout the year, but the
report says it is a politicised process “depending on their relationship with
the officials in charge and influence of their local contacts or sponsors.”
Source: Reuters.
